FOREX-Dollar dips but shows biggest weekly gain in almost 3 months

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    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

 (Updates prices, adds commentary)
    By Saikat Chatterjee and Sinéad Carew
    LONDON/NEW YORK, Nov 12 (Businesshala) - The U.S. dollar lost a
little ground on Friday as high inflation wreaked havoc on
consumer sentiment, but the greenback was on track for its
biggest weekly gain in almost three months after a surprisingly
strong U.S. inflation print on Wednesday prompted investors to
advance their bets for a U.S rate hike.
    The dollar turned red on Friday morning after the University
of Michigan survey showed a plunge in U.S. consumer sentiment in
early November to its lowest level in a decade as surging
inflation cut into households' living standards, with few
believing policymakers are doing enough to mitigate the issue.

    With short-dated U.S. Treasury yields edging higher --
five-year bond yields rose to a February 2020 high -- investors
were  ramping up bets this week that the Federal Reserve will
have to raise interest rates sooner than expected. 
    Against a basket of its rivals, at 1517 EST (2017 GMT) the
dollar index was down 0.04% at 95.116 after falling as
low as 94.991 in response to consumer sentiment. Earlier in the
session it had risen to its highest level since July 2020.
    "Consumers are clearly more worried about real income growth
as inflation outpaces wages for now, and that is weighing on
sentiment," said Erik Nelson, macro strategist at Wells Fargo.
    "That is feeding into growth worries for the dollar and
pushing it lower against most currencies, especially the
Japanese yen as U.S. yields decline here."
    The dollar was down 0.14% at 113.915 yen after
falling as low as 113.77.
    Currency markets have been shaken up since Wednesday when
data showed a broad-based rise in U.S. consumer prices last
month at the fastest annual pace since 1990, casting doubts on
the Fed's stance that price pressure will be transitory.
    But while Friday's survey raised some eyebrows, strategists
were bullish on the dollar, which was boasting its biggest
weekly percentage gain since the week ending Aug. 22.
    "The confidence data this morning was probably a bit of an
eye opener for the markets ... and perhaps helped nudge the
dollar just slightly off its highs," said Shaun Osborne, chief
FX strategist, Scotiabank in Toronto.
    While the closure of bond markets on Thursday interrupted
the flow of the market this week, still "the focus is clearly on
inflation" according to Osborne, who says this "should mean that
the US dollar stays relatively well supported." 
    "We'll be in a standoff in the next few months. We'll keep
an eye on what the Fed does," he added. 
    The renewed strength in the dollar earlier during the week
injected fresh life into the moribund currency volatility
markets, as traders have scrambled to buy options to protect
themselves against further dollar strength. A currency
volatility index hit a fresh six-month high on Friday.
    Markets were pricing a first rate increase by July and a
high likelihood of another by November. CME data is
assigning a 50% probability of a rate hike by then, compared
with less than 30% a month earlier.
    The euro was down 0.06% at $1.1443 after falling
earlier to an almost 16-month low at $1.1433.
    Investors have become increasingly bearish on the outlook
for the single currency as the European Central Bank appears
unlikely to change its extremely dovish policy settings in the
near term against the backdrop of a slowing economy.
    Sterling bulls received a slight reprieve on Friday as
GBP/USD rebounded after hitting a fresh 2021 low, though the
rise may only offer temporary solace as technical and
fundamental factors pointed to further declines.
    Stering was last up 0.39% against the dollar. It
had gained ground in late morning as the dollar weakened and
after the European Union said it was committed to coming to an
agreement with the UK regarding Northern Ireland.
    The risk-sensitive Australian dollar was up 0.53%
at $0.733 after earlier sinking as low as $0.7277 for the first
time in more than a month. 
    In cryptocurrencies, bitcoin was down 1% at
$64,104.89 after briefly hitting a record high of $69,000
earlier in the week.
    
========================================================
    Currency bid prices at 3:17PM (2017 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 95.1160        95.1630     -0.04%         5.707%        +95.2660    +94.9910
 Euro/Dollar                  $1.1443        $1.1450     -0.06%         -6.35%        +$1.1462    +$1.1433
 Dollar/Yen                   113.9150       114.0600    -0.14%         +10.24%       +114.3000   +113.7700
 Euro/Yen                     130.35         130.58      -0.18%         +2.70%        +130.7600   +130.2400
 Dollar/Swiss                 0.9211         0.9210      +0.01%         +4.11%        +0.9238     +0.9202
 Sterling/Dollar              $1.3415        $1.3363     +0.39%         -1.80%        +$1.3425    +$1.3354
 Dollar/Canadian              1.2547         1.2582      -0.29%         -1.48%        +1.2604     +1.2546
 Aussie/Dollar                $0.7330        $0.7291     +0.53%         -4.71%        +$0.7334    +$0.7277
 Euro/Swiss                   1.0539         1.0544      -0.05%         -2.47%        +1.0572     +1.0536
 Euro/Sterling                0.8527         0.8560      -0.39%         -4.59%        +0.8568     +0.8526
 NZ                           $0.7042        $0.7022     +0.36%         -1.87%        +$0.7047    +$0.6997
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.6905         8.6805      +0.04%         +1.13%        +8.7085     +8.6775
 Euro/Norway                  9.9466         9.9347      +0.12%         -4.97%        +9.9611     +9.9230
 Dollar/Sweden                8.7668         8.6959      +0.54%         +6.96%        +8.7680     +8.6918
 Euro/Sweden                  10.0316        9.9776      +0.54%         -0.44%        +10.0353    +9.9703
 
    
 (Reporting by Sinéad Carew in New York, Saikat Chatterjee in
London, Kevin Buckland in Tokyo; Editing by Jonathan Oatis and
Raissa Kasolowsky)
  
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